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Deutsche Telekom Key Note TeleSoft EcoSystem Meeting. Dr. Heinrich M. Arnold Vice President, Deutsche Telekom, Head of New Products and Services Laboratory October 29, 2004. Deutsche Telekom AG Corporate Innovation. Agenda. Deutsche Telekom Corporate Innovation at Deutsche Telekom
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Deutsche Telekom Key Note TeleSoft EcoSystem Meeting Dr. Heinrich M. Arnold Vice President, Deutsche Telekom, Head of New Products and Services Laboratory October 29, 2004 Deutsche Telekom AG Corporate Innovation
Agenda • Deutsche Telekom • Corporate Innovation at Deutsche Telekom • Venture Capital Partnering as a Driver for Innovation
Deutsche Telekom One of the leading telecommunications operators worldwide. Facts & figures (2003) • Revenue: 55.8 Billion Euro • EBITDA: 18.5 Billion Euro • Employees: 251 000 • Phone lines: 57.9 Million • Mob. Subs.: 66.2 Million 4 Business Divisions: • T-COM: Fixed line communication • T-MOBILE:Mobile communication • T-SYSTEMS: Systems integration, Outsourcing, IT-Services • T-ONLINE:ISP, portal services Become leading connectivityprovider of fixed and mobilebroadband services Integrated telecommuni-cations operator
Innovation Quality Efficiency Corporate initiatives Perfectly positioned to generate future growth.
Agenda • Deutsche Telekom • Corporate Innovation at Deutsche Telekom • Venture Capital Partnering as a Driver for Innovation
Business impact of innovation Cost savings, enhanced and new business define requirements for innovation in an increasingly competitive market. EBIT Threats Today‘s Business Cost savings Enhanced Business New Business Market • Internet telephony • Fixed/mobile substitution • Saturation New Competition • Device manufacturers • Service solutions embedded in devices • Alternative operators • Google, Ebay… Organic growth (number of Subscribers and ARPU) is slowing down. The cost to performance ratio of the production platform has to be optimised continuously Enable new products and services to better satisfy individual customer requirements Increasing quality and adoption of existing services by enhancing usability and seamlessness
Defining the focus DT’s view on innovation is based on “4 Is”: intuitive usability, integrated communication, intelligent access, and infrastructure development. Develop Early Recommendations to Enable Future Business Examples: • DSM and WiMAX to complement DSL • Methods for Cost-efficient network-enhancement • Federated ID-Management required • Full Seamlessness between networks • Intelligent profiling across applications IntuitiveUsability Integrated Communication Innovation Activities in and across Divisions IntelligentAccess Derive Corporate R&D-Portfolio • Enhanced User-interfaces • Pervasive Communication • Multi-Access Service Framework • Tracking & Tracing • Overarching AAA • Broadband Wireless Access • NGN / GSN Infrastructure Development
Focus of strategic development Derived from innovation strategy, current focus is on 7 project fields. Ongoing projects Project Fields Currently relevant topics VoiceIdent; ID & Role Management Overarching AAA Value and New Business of Overarching Solutions; Relevant Biometrical Technologies; AAA Solutions MASF-Demonstrator, T-Box, Content Post Production Multi-Access Service Framework Value/New Business of MASF; Local networking technologies; Content Adaptation Permission Tracking & Tracing Tracking and Tracing “Always Best Located” Scenarios; Evaluation of T&T Technologies Permanent monitoring and updating BroadWave; CorWin Broadband Wireless Access Emerging Technologies and Architectures; Applications & Business Models for WiMAX; DxB; Broadband Mobility Customer Care Automation; Future User Interfaces Enhanced User Interfaces Automatic Equipment Recognition; Smart Devices; Future Comm. Environments RFID Business Models Pervasive Communication Machine-2-Machine Communication; Security; Personal Communication Assistant; “Information Tags” GSN+ Next-Generation-Networks/GSN Emerging Technologies; Architectures and Services; Next Generation Packet Interconnection
Stakeholders in innovation Corporate units and divisions have complementary responsibilities. Innovation Management (ZB I) Divisions Applications/ Products/Services T-Venture Process-supportingIT platforms Network & IT platform technology (including OSS) Technology & Platforms (ZB TP) Early technologies/ future business models Evaluation (projects/pilots) Introduction/ deployment Operations "Plan" "Build" "Run"
Agenda • Deutsche Telekom • Corporate Innovation at Deutsche Telekom • Venture Capital Partnering as a Driver for Innovation
T-Venture‘s role in DT‘s innovation Service provider and precursor for innovation transfer. ServiceProvider • Investment strategies as platforms for ongoing fund business - definition of investment areas based on defined market segments • Focus on innovation - leveraging operational business through venture investments into defined investment areas to • support growth strategies of Deutsche Telekom‘s Business Units • facilitate and leverage innovation transfer for Central Unit Innovation (Corporate Development) through corporate fund Precursor • Complement and enhance Business Unit‘s view through pro-active scouting • Continuous stimulation – new investment areas/opportunities
Leveraging the corporate fund Corporate innovation activities to be supported by VC Requirements for corporate fund Active partnering with a strong and well networked VC in Silicon Valley • Selection process started in April 2003 • 10 candidates addressed by T-VoA, all showed initial interest • Intensive talks with all candidates about mutual benefits as well as strategic directions • 3 VC firms considered "First Cut" • 3 VC firms considered "worthwhile to continue talks" • 4 VC firms considered as "not the right partner" for T-VoA • Corporate VC fund on top of four existing divisional funds to support corporate innovation activities • Access to innovation activities in start-up companies in relevant areas of technology • Optimal usage of T-Venture´s presence in USA
Selecting the right partner TeleSoft emerged as the partner of choice after thorough due diligence with two candidates. • Driving the partnership: • T-VoA‘s investment director works out of Telesoft‘s office in San Mateo • T-Venture‘s investment director for the corporate fund is well connected into the corporate R&D activities • Telesoft is by far the most promising partner: • Excellent performance • Investment portfolio so far has ideal focus • Telesoft’s future plans are ideal complement and can be supported by T-Venture • Telesoft offers excellent value for Corporate Fund investment • Telesoft shows high interest to partner with T-Venture